First, build the mall — then the buyers will come

How do you coordinate 150,000 change records a day, with up to 100,000 end user customer visits a month, and over 100 retail partners? Especially when they are all trying to access your website and expecting a seamless, uninterrupted visit?

The short answer is, you can’t, not without some things slipping through the gaps.

The long answer is, you can, but you’ve got to have fun along the way, too.

Ralph Brayham, former head of Toshiba New Zealand and one of Telecom’s rising stars, is leading the team developing Ferrit, the country’s first real online shopping mall.

“The single biggest challenge is managing all that data flow,” says Brayham, who admits to having been caught out a couple of times. Problems include retailers who change prices and don’t pass the information on, and, in a couple of instances, went out of business without letting Ferrit know.

“We’ve been caught out a few times and I’m sure it’ll happen again. That’s part of the challenge and solving that problem takes up a large part of our day.”

After an initial surge in traffic — the month leading up to Christmas saw 115,000 visitors to the site — traffic dropped back to 40,000 a month but is slowly climbing back to just under 100,000.

“We thought we’d be doing 200,000 users a month by now but, obviously, the initial surge was a blip but we’re working our way back up now.”

Brayham says the results from any marketing campaign Ferrit runs are seen instantly in user numbers, so the marketing side of the business will continue to be a priority in the months ahead.

“We’re basically teaching New Zealanders about online shopping and there are still plenty out there that just don’t get it yet,” says Brayham. Books are an obvious example here.

“Whitcoulls has about 60% of the foot traffic in New Zealand. Paper Plus has almost 40%, yet between the two of them they have only single digits of the online book market. That leaves a lot of customers out there buying books online from overseas.”

In addition to showing New Zealanders that shopping online is possible, Brayham has to teach the retailers as well. Currently, Ferrit has between 100 and 150 retail partners, ranging from those already online, like Dick Smith Electronics, to those that have no online presence at all.

“We’re trying to manage the information flow from retailers who update their site almost daily — with new images, new prices, new stock, and those who might only have a handful of inventory that needs updating once or twice a month.”

The current iteration of Ferrit — Brayham says it’s the second full-build of the system — allows retailers to enter their data in any number of ways.

“Currently, we use a secure FTP site. They upload the data and, while we have a strong preference for XML and CSV formats, we’ll take anything.”

That process will have to change, however, when Ferrit introduces its transactional model later this year.

“It drives unneeded complexity because a retailer can send you an XML spreadsheet one week and a PDF the next.”

Instead, Ferrit will operate a Java-based back-end integration suite that it’s building in-house from scratch. On top of that it will develop a merchandiser back-office application for its partners so they can manage their own information.

“They’ll be able to pull together pricing from one source, images that are held elsewhere and item descriptions that might be in a third location.” Brayham says it’s impossible for Ferrit staff to manually check that the item listed as a toaster has a photo of the right toaster with the right price, so automating the process is the only way to go.

“Smaller retailers will still be able to do this manually themselves, but for larger retailers it’s a matter of automating it as much as possible.”

The retailers are, for the large part, very supportive of the process, says Brayham.

“They get it. They realise that what we’re doing is building an entire model for them to use and they understand the implications of this. New Zealand is way behind the rest of the world on this and the retailers understand that people will want to shop online, so they want to be there for their customers.”

But Ferrit isn’t about to sit still. The new version of the site, complete with transactional capabilities, will be launched later this year, possibly in August.

“We’re struggling to explain the simplicity of the proposition. Now, the proposition is ‘find what you want’. Soon it will be ‘buy it online’.” Only a small percentage of New Zealand’s largest retailers are online but Brayham hopes to change all that in the months ahead. Being able to process multiple transactions from different customers, with different return policies and different shipping charges, will be the biggest hurdle the company has yet to face.

For Brayham, the best part of working at Ferrit is seeing the team solve the most complex of problems.

“Nobody will ever truly understand how complex the issues we face are. Juggling the retailers’ needs with customers’ needs and trying to build a system that works well for everyone is so complicated but that’s half the fun of it.”

Brayham says Ferrit must become an “exceptional retailer”, even thought it isn’t a retailer itself, so it can better understand what the retailers need.

“We have to understand their supply chain issues. We need to be able to build a logistics process, a shipping process, a payments process, an order management process.” Some retailers, particularly those with no existing online order mechanism or mail order process, have no process in place at all for an online-style order. Brayham says Ferrit is helping them to build that ability.

“You’ve got to confirm they’ve received the order, confirm the goods are available, confirm the goods have been picked, often off the shelf in a retail store because they have no central stock facility. You’ve got to confirm the order has been packed and then shipped.”

For smaller retailers, this isn’t a problem, as it’s simply a matter of collating orders at the end of the day and couriering them out from a store. But a process that might work well for five orders a day won’t necessarily work at all for 1,000 a week.

“We have to grow with them rather than requiring every retailer buy an ERP solution that costs tens of thousands right off the bat.”

From a customer’s perspective, Ferrit is also about to increase in functionality. Alongside a payment gateway, Ferrit will roll out a comparison engine that will allow shoppers to compare products in a variety of ways.

“Say you want to compare prices of iPods. You’ll be able to do that within one store, for different specs on the iPod. You’ll be able to do that between retailers, for the best price. You’ll also be able to compare the iPod with a fridge freezer and a stereo system because when I’m shopping for a gift I want to be able to come up with a range of options that might not all be the same product.”

Brayham also wants to put some of the enjoyment and anticipation back into Christmas shopping.

“Kids in New Zealand don’t get that whole build-up to Christmas that they get [in the US], with Thanksgiving and all that. I’d like to put some of that anticipation back in if we can. Maybe we’ll have wish lists that the kids can see eight items have been bought but they don’t know who by or which items, something like that.”

He’s also keen to give shoppers an alternative to the Christmas “mall madness,” he says.

“If you can get most of your shopping done without having to go to the mall then that’s a good thing, right?”

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